Small Financial Steps in Increments of 25

September 2022

Barbara O’Neill, Ph.D., CFP®, AFC®
Distinguished Professor and Extension Financial Management Specialist Emeritus
Rutgers Cooperative Extension

When the Small Steps to Health and Wealth™ workbook was initially written in 2004, we included a chapter (PDF) called Live the Power of 10. In this chapter, we described health and financial action steps that included the number 10 or multiples of ten. Examples include:

1. Exercising in 10-minute increments
2. Walking 10,000 steps per day
3. Saving 10% of gross income
4. Saving $1 per day, plus spare change

Eighteen years have gone by and, with inflation during this time, $16 in 2022 has the same buying power as $10 in 2004 according to the Bureau of Labor statistics CPI Inflation Calculator. I decided to round up to 25 and investigate small financial steps that people can take with the number 25 or multiples of 25.

Consider the following examples that include the number 25:

1. Save 25 cents a day and you'll have $91.25 at year's end (this is a great goal for children).
2. Save $2.50 a day and you'll have $912.50 at year's end, plus interest.
3. Save $250 per month and you'll have $3,000 at year's end, plus interest.

Here are seven other suggestions:

1. Consider increasing your contribution to a tax-deferred retirement plan by 2% or 5%. The easiest time to do this is when you get a salary increase or when a household expense, like childcare or a car loan, ends.
2. Save your tax refund. The average refund this year was about $3,000. If you spend $500 and save the remaining $2,500 for 10 years earning a 6% average return, you will have almost $4,500 in 2032. Save $2,500 every year for the next 10 years and you will have $32,952.
3. Sign up for a stock or mutual fund automatic investment plan and authorize the account custodian to debit your bank account monthly by $25 (or $250) to purchase additional shares.
4. Consider buying a U.S. savings bond via the government Treasury Direct website. The minimum purchase for a Series EE bond is $25. The minimum purchase for Series I bonds is $25 for electronic bonds and $50 for paper bonds that are purchased with a tax refund. Interest rates earned are adjusted every six months.
5. Complete the $2,500 Savings Challenge (PDF) over the course of the next year. The challenge starts with $2 of savings during Week #1 and deposits increase by $2 weekly until $2,500 is saved by Week #50. If this sounds a bit ambitious, try the 30-Day $100 Savings Challenge (PDF) and save $25 times four ($100) in a month.
6. Pay more than the minimum due on credit cards…in multiples of "2," "5," and "0," of course. Consider this example. If you owe $5,000 on a credit card charging 18% interest with a 3% (of the outstanding balance) minimum payment, it will take $9,567 and 16 years to pay it off with monthly payments of $150. Up the monthly payment by $50 to $200 (4% of the outstanding balance) and you will save $1,759 of interest and five years of payments according to the Credit Card Smarts calculator from Advantage Publications.
7. Try to save 25 times the amount of annual income needed in retirement so you can stretch out your savings for 30 years. This "Rule of 25" is not an absolute guideline but, rather, a useful metric to plan how much money you need to save. It is closely aligned with the popular 4% Rule for retirement income withdrawals.

Like the number 10, "25" can be a powerful number when it is included in financial planning action steps. Every small step makes a difference. Live the power of 25!